|Issue:||Asia-Pacific II 2010|
|Topic:||The hidden costs of mobile messaging|
Cyrille Even is Tyntec’s Vice President for Asia; he is responsible for the company’s operations and business development in the Asian region. Mr Even has extensive experience in multinational telecommunications, media and gaming companies. Mr Even was previously COO and Vice President of Mobileway, now Sybase365, and a Marketing Director at Alcatel. Mr Even also worked as a consultant in IT Management in Canada and for System Interface Inc, as well as with Grundig in Malaysia. Cyrille Even followed the INSEAD Telecom Program in Singapore, holds an MBA from Ottawa University in Canada and a Masters degree from Ecole de Management of Grenoble, France.
SMS reaches nearly every corner of the world and anyone – that’s almost everyone today – can instantaneously transmit messages internationally for a matter of cents. In Asia alone SMS traffic is expected to grow to over 2.1 trillion messages in 2010. Messaging is a simple, profitable, mobile service, but as European operators quickly found out when they offered MMS picture messaging, there are hidden costs to deal with when done incorrectly, when it doesn’t function intuitively, simply correctly.
Connectivity comes in many forms, fixed and mobile, voice and data, person-to-person or machine-to-machine. Similarly, the costs of connectivity can take many guises. There is the straightforward financial cost of connectivity, whether in cables and routers or minutes and messages, but there are also a range of further, potential costs that users of connectivity need to be aware of and to avoid. Mobile messaging This is nowhere more true than in my market, mobile messaging. Mobile messaging, and in particular SMS, has brought huge benefits to businesses and consumers around the world over the last 25 years or so. Mobile messaging is cost effective, it is ubiquitous, it is easy to use and it is hugely flexible. SMS is unique amongst connectivity types in that it reaches nearly every corner of the world; it is familiar to nearly every user of one of the most widely adopted devices in history, the mobile phone; and it can near instantaneously transmit a huge range of different information and content types internationally for just a matter of cents. Mobile messaging in Asia Asia as a whole is a clear case study of the success of mobile messaging. The Asian mobile messaging market has seen tremendous growth, with total projected SMS traffic expected to grow to over 2.1 trillion messages in 2010, a year-on-year growth of over 12 per cent according to Gartner. Off the back of this, revenues from SMS usage in the region are expected to increase to US$15.1 billion, according to Portio Research. Asian markets have their own peculiarities when it comes to SMS. As well as regional variations in terms of language, networks and protocols, there is also a region-wide tendency to extreme price-sensitivity in the SMS market. More so than in any other market I know, Asian business users will tend towards the lowest cost solution for SMS. This is by no means a bad thing; in many markets prices for volume SMS have been artificially inflated by regulation or by lack of competition, however the demand in the Asia-Pac region for low prices has bred a healthily competitive marketplace. However, this single-minded focus on the financial cost of SMS could lead some to ignore factors that can add to the hidden costs of mobile messaging services. The hidden costs There are many reasons why an organization might want to introduce SMS into their communications portfolio. An airline might want to alert its passengers about changes to flight times or arrival gates; a bank might want to send its customers security information; or a company might want to maintain contact with its remote staff. These examples all combine some key factors: they’re about enhancing customer service; they’re about facilitating two-way interaction; and they’re about making the most of the flexibility that SMS offers us. However, any medium that can offer these benefits when used correctly can also run the opposite risks when used wrongly. If I can make my customers or staff more loyal through a properly configured and display for mobile service, I can also make them less loyal by a poorly constituted effort. MMS – a cautionary tale A key example of this is the launch of Multimedia Messaging Services (MMS) in Europe. Picture messaging volumes, it was argued, were going to overtake SMS in a matter of months or years. It offered consumers rich functionality and it offered mobile network operators a new revenue stream. MNOs, it was believed, would turn on MMS on their networks and the money would come streaming in. As it happened, this never occurred; MMS in Europe has remained, at best, a minority interest and most MNOs have long ago moved onto the next big thing. The issue was that MMS wasn’t properly set up for consumer usage when it was launched. It was the subject of millions of pounds of advertising spend, it was heavily pushed in stores and on devices by the MNOs and it was the subject of every mobile industry publication around. However, when a customer actually got their hands on an MMS-enabled phone they found that it was a clunky user experience and that it was sometimes nearly impossible to actually send a message. Apart from the limited number of MMS handsets in the market at the time, operator interoperability wasn’t established for many months, meaning that many friends who did have compatible phones were on incompatible networks. Combine that with a somewhat optimistic pricing strategy by the operators and you had the recipe for a disaster. The interesting fact about the launch of MMS isn’t simply that it failed; it is how and why it failed. MMS or other picture messaging technologies have actually proved to be hugely popular in some markets, notably in Japan. However, it failed in Europe because the services were set up wrongly, launched wrongly and operated wrongly. The lessons for mobile businesses The lesson we can take from the European MMS debacle is that, if you’re going to launch a mobile service, it needs to be right and it needs to be right from the start. Because most European consumers had a bad experience of picture messaging from day one, they have subsequently ignored all attempts to get them to re-engage, however much the service has improved. The hidden cost of mobile messaging, as with many other consumer services, is that the cost of getting it wrong can be hugely punishing. To avoid this hidden cost, you need to plan your approach and your services correctly. You need first to establish the market need for a mobile service – I might be interested in knowing that my plane is going to be 20 minutes late, but do I care as much if my post is going to be 20 minutes late? Second, the service needs to be easy to use. Writing an SMS is easy, but if you start asking people to enter complex data into their phone keypad, they’re quickly going to walk away. The reason that SMS is as successful as it has been is that it’s simple – don’t let the workflow of your mobile service undermine that simplicity. Lastly, and most importantly, you need to be certain that your mobile service is going to be reliable. One of the key issues with MMS is that people would send a message and it would never arrive, leading them to conclude that the whole thing wasn’t worth bothering with. Consumer loyalty can take a long time to build but only moments to destroy. If you say that you’re going to deliver a message on time, you need to deliver it on time as the consumer isn’t going to give you a second chance. Mobile messaging quality One of the by-products of the extreme price sensitivity in Asian mobile markets has been a tendency to sidestep the quality issue. The quality of SMS can vary in a wide range of ways, such as different levels of message loss or delivery delays. Some level of loss or delay might be acceptable in ‘consumer’ SMS, where a friend is texting a friend about personal matters, but in a business-to-consumer or business-to-business environment, no level of loss can be considered acceptable. As we saw with MMS, the cost of failing to connect with your customers when you promised to do so can far outweigh the costs of ensuring that the message was delivered in the first place. There are many ways to send an SMS and some of them are more reliable than others. Some providers use low-cost international centres to buy international SMS and then send to the destination market, resulting in significant message loss and potential issues with spam blockers. Other companies aggregate a huge number of individual connections to mobile operators, with the attendant risks of a complex system. Others integrate into operator-level connectivity and can connect directly to end user handsets, meaning that messages are controlled throughout the sending process via a single point of contact. Whichever approach you take, it is vital to establish that it can offer the levels of quality you need. Dependent on the commercial deal you can strike, none is necessarily cheaper or more expensive than the other, but if you buy on price alone, you can never be sure that you’re not going to be incurring the hidden costs of poor mobile messaging connectivity. The hidden expenses of mobile messaging aren’t inherent in the medium; when used in the right way SMS can deliver huge benefits and cost savings. The hidden costs can emerge in the way that people deploy mobile messaging – doing it wrong will always be more expensive, in the long run, than doing it right first time round.